The 5 Best Places to Hide Emergency Cash at Home

AlamyStashing your cash under the mattress isn't exactly a theft-proof spot. The bottom of a fish tank on the other hand ...By Paul Sisolak

They call it saving for a rainy day, but when we wait for the rainy day before we begin saving, we're left in a quandary if we need funds on hand in the event of an emergency. Personal finance experts suggest keeping a financial reserve of three to six months of living expenses at all times. But according to a recent poll by the nonprofit Corporation for Enterprise Development, 44 percent of Americans don't readily have the liquid assets they need to cover surprise expenses -- and even fewer people hold it in the form of that classic currency: cash.

In the event of some national emergency, major catastrophe or just a bad power outage, financial institutions could be rendered temporarily inoperable, as well as your ability to withdraw money or use your credit or debit card. Having some physical cash is practical, though you might hesitate to position any in your home since a suitable, theft-proof hiding spot is hard to find. The old money-taped-to-the-underside-of-the-toilet-lid trick doesn't work. (Just like under your mattress, it's one of the first places burglars look.)

1. Inside false infrastructure. Constructing fake fixtures around the house, like a drain pipe in the basement, return air vent in the living room or power outlet on a bedroom wall, gives the appearance of working household parts, but in fact, acts as a facade for hiding your emergency money inside. Some homeowners may need to be on the handier side for this idea, since it may involve some do-it-yourself drilling, fitting and securing. Too DIY intensive? Many online vendors sell installation-ready versions that double as light switches or electrical plates.

2. Buried outside. What better way to hide money inside your house than hiding it outside? Pick a reasonably conspicuous spot in your yard or garden to bury your money, and carefully protected, nobody will find it -- except you, as long as you remember where you dug. Be sure not to leave your $20s, $50s and $100s uncovered, since the elements can decompose the paper over time. Instead, zip cash up in bags, put it in glass jars and/or wrap the bills in plastic or a small tarp. Unless would-be thieves have a shovel, light and plenty of time on their side, they're unlikely to look in the ground.

3. Disguised and dispersed. Sometimes, hiding your money in less conspicuous places can be the most inconspicuous hiding spot that a thief might overlook. Are you a devout bibliophile? Hollowing out a book to stuff some bills into is an outdated method, but not for anyone with an extensive library of tomes floor to ceiling, where the "money book" is hidden among hundreds of other books and more difficult to find. What about hiding some cash in an envelope in a box of blank envelopes? Odds are the irony will be lost on a burglar with a low IQ. Money doesn't have to be folded or stacked, either: It can be rolled into bike tires, curtain rods, hollow broom handles, table legs, or anything cylindrical that needs more than a bit of dismantling. (Remember, you don't need to keep all your emergency money in one place, either.)

4. Sleeping with the fishes. If you own some pets of the aquatic kind, and their tank is large enough, roll your emergency proceeds securely in a solid color jar and hide it among the coral, seaweed, Atlantis ruins or behind the water filter -- places that even the most concentrated, keen eye might miss. If that's not opaque enough, go for an envelope wrapped in plastic, more plastic and a Ziplock bag, and place it flat at the bottom of the tank under colored gravel. Homeowners with a fish pond can do better by nestling a jar of money at the pond bottom, making sure it's submerged and heavy enough to prevent flotation to the top. Don't worry -- the fish won't tell.

5. Fail-safe in a safe. Another options is simply to invest in a heavy duty safe that proclaims its presence with the confidence that it won't be compromised by anyone or anything. A steel or cast iron floor safe can cost anywhere from a few hundred to several thousand dollars, but when it comes to security, you do get what you pay for. Find one that can be bolted firmly to the floor, heavy enough to deter easy lifting, and with a series of locks, combinations or, if applicable, one linked to a home alarm system.

Can hiding your emergency fund in plain sight work? It wouldn't be wise to leave your hard-earned savings out in the clear blue open, but some experts believe leaving a bit of "bait money" in view -- $50 or $100 out in the open -- can satisfy a thief looking for a quick cash grab. Should the distraction be successful, the real savings you've stealthily stashed throughout your household, thanks to these tips, will stay safe and sound. Now, the real challenge is saving up that emergency fund for when it matters most.

Paul Sisolak writes for GoBankingRates.com, a source for the interest rates on savings accounts, CDs, mortgages, auto loans and more.

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10 Financial Rules You Should Break

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The 5 Best Places to Hide Emergency Cash at Home

This is the granddaddy of them all. Start to type "emergency" into Google (GOOG), and the first suggestion is "emergency fund." The rule is to make sure you have six month's of living expenses tucked away in cash in case you losefyour job or suffer a financial setback. Of course it's important to have a financial safety net, but when you earn virtually nothing on your cash, this rule can cost you. For example, if six months of living expenses for you is $25,000, you'd be sacrificing close to $1,000 of income a year by keeping this money in a checking or money market account.

For years, I've broken the mold on this financial rule by telling clients they shouldn't have their emergency fund in cash. Instead, choose a short-term bond fund that pays 3 percent or higher for your safety net. If you need the money quickly, you can easily sell the fund and get access to the cash. If you don't need the cash –- and these emergency fund accounts are rarely used –- you can still make money on the assets.

Not so fast. There are many good reasons to contribute to a 401(k), such as tax savings, tax-deferred growth and a possible employer match, but there are also good reasons not to contribute as well. Don't blindly dump money into your 401(k) if you don't have an emergency reserve of some sort and there is a chance you will be laid off. It is taking longer for most to find a job, so if you think you may be out of work, make sure you have the resources to pay rent and buy food until you land a new job.

​Also, if your employer doesn't provide a match and you are in a low-income tax bracket, it may make more sense to pay the tax now (since you are in a low tax bracket) and invest in a Roth individual retirement account instead. Use this 401(k) vs. Roth IRA calculator to crunch the numbers.

You cannot cut your way to wealth. Too many people and financial advisers focus on trimming expenses when they should be focused on the other half of the equation -- income. I'm a proponent for living within one's means, but too often that creates an artificial barrier or ceiling. "This is what I make, so I have to cut back to save more," is often the thought process. Rather than living within your mean, work on increasing your means.

There are many ways you can make more money, including asking for a raise, boosting your skills –- your human capital –- and getting a promotion, starting a side project in the after-hours or going back to school and starting a new career. What you make today is not necessarily what you can make tomorrow. Cut unnecessary expenses and then use your energy to increase your income.

You should only save for your children's education if you can afford it. That means when you're on track to having enough assets for your retirement. Assuming you have the retirement assets and now want to save for college, most advisers will recommend a 529 college savings account.

Not so fast. These 529 accounts have some real advantages, such as tax-free growth of contributions if they are used for approved higher education expenses. This tax-free growth is a big benefit. However, if you withdraw money from this account and do not use it for approved higher education expenses, the gains will be subject to ordinary income tax and a 10 percent penalty.

The big risk is if you fully fund your child's college education but he or she decides to not go to college, drops out, finishes early or goes to a less expensive school. You have the ability change the beneficiary to another qualifying family member without penalty, but if you have just one child, there may not be anyone you can transfer the funds to. You would then have to liquidate the account and pay the tax and penalty. If you are undeterred and still want to pay for your child's college education, start with a small contribution into the 529 and fund up to a maximum of 60 percent of the cost in case one of the above scenarios occur.

The average age of cars on U.S. roads is 11.4 years. So if you're average, then it may make sense for you to buy a car -– especially a car a year or two old –- instead of leasing. However, if you do not intend on driving the same car for over a decade, a lease may be a much better option. A new study by swapalease.com found it was better to lease than buy based on its criteria. And under certain circumstances, you may be afforded a larger business deduction with a lease compared to a purchase.
cars

The certified financial planner designation is the gold standard when it comes to financial planning. I wouldn't think of hiring a financial planner if they weren't a CFP practitioner. However, just because you are working with a CFP doesn't mean you shouldn't research your adviser, his or her areas of expertise and how he or she charges. The CFP tells you he or she has advanced training in areas related to tax, investing and retirement planning; has passed a comprehensive and difficult exam; and has agreed to adhere to a high code of ethics.

The onus is on you to know what you need and to make sure your CFP financial planner can deliver. Don't get lulled into thinking that just because he or she have three letters after his or her name that he or she has been screened. Ask tough questions before you trust your money to anyone -– even a CFP.

Most financial pundits will advise taxpayers to have just enough taken out of their paycheck so when April 15 comes around, they will neither owe money nor receive a refund. The rationale is if you get a refund from the Internal Revenue Service, it means you paid too much in over the year -- and the government has had use of your money without paying you any interest. Keep the money and invest it yourself is the theory.

'Again, that's the theory, but reality is much different. It all comes down to psychology. I look at paying a bit more to the IRS as a forced and automatic savings account. Sure you won't earn interest, but human nature tells us you probably won't save the money anyway. There is a greater chance you will squander $100 a paycheck then if you receive a $2,400 check from the IRS. One approach takes a plan and discipline each month to save and invest while the other doesn't. A check from the IRS isn't an interest-free loan; it is an automatic savings plan.

Nobody wants to endure an IRS audit, but too often I see honest and ethical taxpayers avoid claiming certain deductions or taking certain positions that are completely legitimate because they fear it will increase their chances of an audit. First, your chances of being audited are small –- about 1 in 104 chance. If your return doesn't include income from a business, rental real estate or farm, or employee business expense deductions, your chances are even smaller -– 1 in 250. Second, if you and your tax preparer are not crossing the line, you have little to worry about. In fact, thousands of taxpayers get a check from the IRS at the end of the audit. Don't let a small chance of an audit keep you from taking advantage of every tax strategy for which you qualify.

Do what you love, and you'll never have to work a day in your life, or so the saying goes. It sounds good and feels good, but it's not necessarily true. Sometimes –- often, actually –- doing what you love can be a great hobby but not a good career. There are a lot of things I enjoy that I'll never make a dime doing. A better approach is to find something you enjoy, are good at and that you can get paid to That is the financial trinity you should aspire to find because it ties your interests with your skills with the marketplace

Follow this rule, and I'll send you straight to detention. We know college costs are soaring, and we don't want to bury our kids in college debt, so most parents prioritize college saving over retirement saving. Big mistake. If worse comes to worst, Junior can get a loan, work while in school or go to a less expensive school. Basically, Junior has decent options, and you have tough choices.

​If you haven't saved enough for retirement, you are stuck. There's very little you can do other than slash your expenses, work longer or both. Save for your own retirement first. That's the financial rule you should follow. If you have amassed so much wealth when your children head off to college that you can afford to help them, go for it. If you haven't, you'd be doing your kids a disservice by jeopardizing your own retirement by paying for their tuition.